A basket of ASX shares involved with lithium production is going gangbusters on Friday.
At the time of writing, the Novonix Ltd (ASX: NVX) share price is soaring 7.2%, Pilbara Minerals Ltd (ASX: PLS) is also trading 7.2% higher, and Allkem Ltd (ASX: AKE) shares are going for 5.6% more than when they started the day.
What's going on?
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Enjoy the inexplicable bounce in ASX lithium stocks
None of the three ASX lithium stocks made any announcements today that would affect their share prices.
The trio seems to be simply enjoying a rebound after lithium shares deflated badly in June.
All these recent movements seem to be sentiment-driven. According to Trading Economics, the lithium carbonate price has remained steady since early March.
The S&P/ASX 200 Index (ASX: XJO) is also up more than 0.5% on Friday, so there is considerable upwards momentum in the share market generally.
Pilbara, based in Western Australia, has seen its share price plummet 32% year-to-date.
Novonix is a pre-revenue ASX lithium share that enjoyed a spectacular (and speculative) 594% rise in its stock price last calendar year.
This year, though, it is suffering through a 76% drop.
Allkem has fared the best in 2022, losing just 5.8% of its valuation so far. The stock surged 60% upwards in the 2022 financial year.
Long-term demand for lithium
Lithium is in demand as an ingredient for high-powered batteries, such as those used in electric cars.
Hence it's seen as a valuable commodity in a world transitioning to lower carbon economies.
Shaw and Partners portfolio manager James Gerrish also explained last month that lithium is difficult to substitute.
"Lithium has unique characteristics that are difficult to replicate. It is a light metal but is able to store large amounts of energy and is an excellent conductor of electricity," he said in a Market Matters Q&A in June.
"Demand for lithium has grown at [approximately] 20% compound annual growth rates through 2017 to 2022 and we think that will continue, while lithium deposits that are technically and economically viable to exploit are rare."
